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The Problem with One Price
Having a single subscription tier at one price leaves two groups of users unsatisfied. Some can’t afford the price, while others are willing to pay more but can’t. This means you’re missing out on potential revenue from both ends. By offering multiple tiers, you can better meet the needs of different users and capture more value.
Tinder’s Tiered Pricing Strategy
Tinder successfully uses tiered pricing with Tinder Plus, Gold, and Platinum. Each tier targets users with different willingness to pay. This approach allows Tinder to meet users where they are on the demand curve, maximizing revenue by capturing users across different price points.
Layering Consumables for More Value
Tinder enhances its tiered pricing by adding consumables like super likes and boosts. These allow users to spend more on top of their subscriptions, fitting the demand curve even better. This combination of subscriptions and microtransactions optimizes pricing and increases revenue.
“”The thing that happens is if you have one subscription tier at one price, there’s two buckets of users that don’t get their needs met.””
The Role of Free Tiers
Free tiers can significantly boost user growth by reducing friction. Tinder’s free tier allows a large number of users to join the platform, creating a vibrant ecosystem. This is crucial for apps with network effects, where having more users enhances the overall experience.
Understanding User Needs
Different users have different needs. For example, Tinder’s paid products focus on users who aren’t getting many swipes, offering features like boosts to increase matches. Understanding and catering to these varying needs can enhance user satisfaction and increase revenue.
Experimentation in Pricing
Tinder’s approach to pricing is highly experimental, with numerous SKUs tested across different regions. This allows them to find the optimal price points and product bundles that resonate with users, maximizing revenue and user engagement.
“”You’re leaving money on the table on both sides of that subscription.””
The Importance of Free-to-Play
Free-to-play models work well for products with significant network effects. They allow more users to experience the product, increasing the potential for conversion to paid tiers. This model is particularly effective in dating apps, where a large user base is crucial.
Long vs. Short Onboarding
The length of onboarding should match the product’s aha moment. For complex products like weight loss programs, a longer onboarding builds confidence. For apps like Tinder, a short onboarding quickly gets users to the aha moment of matching with others.
Frameworks for Goal Setting
Narratives, Commitments, and Tasks (NCTs) offer a comprehensive alternative to OKRs. They include the strategic why, the what, and the how, providing a complete framework for setting and achieving goals without the need for additional strategic dependencies.
“”The beautiful thing is, it creates a nice chair step where you meet people where they are on the demand curve.””
The Role of Narratives in Goals
Narratives provide the strategic why behind goals, ensuring that all efforts are aligned with the company’s mission. This helps teams focus on what truly matters and avoid getting lost in tasks that don’t contribute to the bigger picture.
Turning Earned Audience into Owned
In a shifting digital landscape, turning earned audiences into owned ones is crucial. This involves creating direct channels like email, building habits around content, and ensuring users regularly engage with your product, safeguarding against algorithm changes.
The Power of a Clear Mission
A clear mission, like RevenueCat’s ‘help developers make more money,’ guides all company efforts and decisions. It ensures that the entire organization is aligned and focused on delivering value to customers, which is key to long-term success.
“”This combination of a subscription set of tiers, as well as Microtransaction products turns out to be one of the most optimal ways to price your product.””
The Impact of Quality
Quality should be a core feature of any product. Companies like Spotify prioritize quality, ensuring their product never disrupts the user experience. This focus on quality can set a product apart from competitors and build lasting user loyalty.
Frequently Asked Questions
What are the benefits of having multiple subscription tiers?
Having multiple subscription tiers allows you to cater to different user segments, maximizing revenue by capturing both budget-conscious users and those willing to pay more for premium features. This approach helps in addressing the diverse willingness to pay among users, ensuring that you don’t leave money on the table.
How can I effectively onboard users to my app?
To effectively onboard users, focus on creating a seamless experience that highlights the value of your app quickly. Identify the ‘aha moment’ for your product and design the onboarding process to guide users to that moment, whether through a short or extended flow, while ensuring they feel confident in their decision to engage with your app.
What is the importance of having a clear mission for a company?
A clear mission provides direction and purpose for a company, guiding decision-making and strategy. It helps align the team around common goals, fosters a strong company culture, and ensures that product development is focused on delivering value to customers, ultimately leading to long-term success.
Editorial Team
